I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Thursday, October 30, 2008

Steve Waldman Sings

Steve Waldman (SW) has a 19 October 2008 post at Interfluidity I largely agree with. SW writes, "The purpose of a financial system is to solve a problem whose solution we cannot guess a priori". Precisely. That's the job of Adam's Smith's "invisible hand". In 1930 Ludwig von Mises and Oskar Lange debated the possibility of economic calculation in a socialist world. Mises point: without the capitalist West, socialist states could not exist as they needed to ape the West for the parameters in the equations they would use to allocate resources. This is why I believe Wassily Leontief's (WL) 1973 Economics Nobel Prize was the worst ever awarded. WL was, drumroll please, AN ACCOUNTANT! He could not distinguish historical from opportunity cost among his other failings! "To the maximum degree possible, the financial system ought not introduce risks that are not inherent to the real projects it is underwriting. ... Complexity is much more often a marker of snake-oil than of quality in a financial instrument", writes SW. Exactly. Here's a link: http://interfluidity.com/posts/1224388192.shtml.